How to understand if word of mouth is working for your business

As everyone knows – word of mouth is a powerful marketing tool. It can bring customers to you in their droves, but just as easily it can turn them away. So how can you ensure that it’s working effectively for you? Dominic Kitchin from The Science of Buying has some advice to help you use word of mouth to build your business.

As daunting as this may seem, it is possible to start and grow a business almost entirely through word-of-mouth. For example, Zappos, the online clothing and shoe retailer, attributes much of its success to word of mouth. They have never had big advertising budgets, and from day one the company has focused on building the business through word of mouth.

CEO Tony Hsieh, in his online ‘Delivery Happiness’ FAQ’s page, makes it absolutely clear that his customers have always been his greatest flag bearers, “Our philosophy is to take most of the money we would have otherwise spent on paid advertising or paid marketing and invest it into customer service and the customer experience instead, and let our customers do the marketing for us through word of mouth.” Zappos was brought by Amazon in 2009 for a reported $928million … not bad for a company built on word of mouth advertising by focusing on having a great company culture and customer experience. Dominic’s advice to any business that wants to increase sales is; be customer centric. Happy customers mean increased profits.

Doing some research to understand exactly where your business is coming from will help you determine if word of mouth is working for you and if you’re making the most of this low cost avenue. You should aim to get your referral rate above 75%, i.e. 75% of your client base is referring new customers to you. Anything below that means your company is not customer-centric.

For example, Zappos attribute 75% of their sales as coming in from repeat customers. The average order size for returning customers is about $140, compared to about $110 for first-time customers. (Source: http://www.clickz.com/clickz/column/1703988/word-mouth-marketing-101-la-zapposcom )

This shows just how customer-centric the company really is. However, ultimately, it’s the company’s ethos of going above and beyond that gets their customers acting as their biggest, best and lowest cost form of advertising. There are several examples of this, which Zappos practices 24/7; “When Zappos offered special return shipping assistance, beyond their company policies…the good word about the company spread quickly throughout the blogosphere.” (Source: Exceptional Service, Exceptional Profit: The Secrets of Building a Five-Star Customer Service Organization, Leonardo Inghilleri and Micah Solomon, Amacom Books (New York), p. 116, 2010)

This, in Hsieh’s words, is delivering the “WOW through service” – and that’s what gets people talking. Social media plays a part ion spreading the message – but according to Hsieh it’s the reaching out to, and speaking with, customers that actually gets customers spreading the word.

“We don’t really look at Twitter as a marketing vehicle, so we don’t look at how it translates into the bottom line. What we care about is being able to connect with our customers on a more personal level. We do that through the telephone as well as through Twitter. Nobody writes about the telephone because it’s not an interesting news story, but we believe it’s actually one of the best branding devices out there.” explains Hsieh. (Source: http://www.techrepublic.com/blog/10-things/10-questions-on-customer-service-and-delivering-happiness-an-interview-with-zappos-ceo-tony-hsieh/ )

Great customer service is also engrained in their company culture.
Hsieh states: “For example, every new employee that we hire in our corporate office is required to go through four weeks of customer loyalty training (answering phones in the call center) before starting the job that he/she was actually hired for. To us, customer service isn’t just a department — it is the entire company.” (Source: http://about.zappos.com/zappos-story/looking-ahead-let-there-be-anything-and-everything )

The proof is in the pudding; Zappos testimonials page is full of loving, grateful, thankful messages to their staff. They demonstrate that if you listen and give your customers what they want, and go above and beyond what they expect of you, then they WILL promote you and be your customer (and possibly friend) for life.

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About the Author:
Dominic Kitchin is an expert in business growth. Dominic is of Saxonbury & Kent Ltd. and founder of The Science of Buying. He has over 15 years’ experience helping business leaders and owners dramatically grow their businesses by understanding why their customers buy from them. He helps them enhance company leadership to create a customer centric culture, increase top and bottom line growth, strengthen company management teams, create and protect business wealth, implements succession plans and transitions businesses to achieve a life balance. He has worked with multinational corporations and household brand names such as HSBC, KFC, Radisson Edwardian, ING, amongst others.